Supreme distinction, outcome

The U.S. Supreme Court without comment declined to review a Tenth Circuit ruling that said the trustee of bankrupt Magnacom Wireless L.L.C. is not entitled to proceeds from the re-auction of the company’s cancelled wireless licenses.
Magnacom paid nearly $48 million for 13 F-Block personal communications services licenses picked up at a 1996 spectrum auction. The Magnacom legal challenge revived ghosts of Federal Communications Commission/NextWave Telecom Inc. past. The high court in 2003 ruled in favor of then-bankrupt NextWave Telecom, essentially concluding bankruptcy code trumped the FCC’s regulatory authority. NextWave later cashed in – collecting more than $4 billion total – by selling PCS licenses to then-Cingular Wireless L.L.C.(now AT&T Mobility), Verizon Wireless and MetroPCS Communications Inc.
But as the courts concluded in the Magnacom case, all spectrum auction lawsuits are not equal. Facts and circumstances matter.
“We conclude that the FCC’s cancellation of Magnacom’s licenses extinguished Magnacom’s interest in those licenses and the underlying spectrum,” stated the Tenth Circuit in September. “Such cancellation did not result in any traceable proceeds, and did not constitute a lien-enforcement remedy. Therefore, Magnacom is not entitled to such proceeds.”
In affirming a lower court ruling, the circuit court drew a key distinction between NextWave and Magnacom.
“NextWave is not applicable here, however, because Magnacom’s trustee does not challenge the FCC’s cancellation of licenses and does not seek relief based on [Section 525 of bankruptcy law],” wrote Circuit Judge Sandra Ikuta at the time in the unanimous decision. “Magnacom’s trustee did not object to the FCC’s motion for relief from the automatic stay to allow the FCC to cancel the licenses. Nor does the trustee now argue that the FCC’s cancellation of the licenses violated [Section 525] . Section 525 is not applicable when, as here, an entity does not challenge the cancellation of its license.”
Also last week, in its current incarnation, NextWave Wireless Inc. said it hired Deutsche Bank and UBS to test the waters for the possible sale of wireless spectrum in advanced wireless services, wireless communications services, educations broadband service and broadband radio service bands. Another boatload of money could be coming CEO Allen Salmasi’s way. You’ve got to hand it to the guy; he always seems to come out smelling like roses. He has reinvented NextWave into a technology company that could be a force in the deployment of next-generation wireless networks.
Meantime, Magnacom’s trustee, who drew on some of the same legal expertise that supported NextWave in its brawl with the FCC before the Supreme Court, is headed home empty-handed.